West and North Africa
Ghana, Its Diaspora and the Rise of Mobile Money Transfers
As Ghana reflects on its 60-year history, there is a lot to be proud of.
Not only the country’s growth into a thriving and successful nation state, but the achievements of Ghanaians everywhere, a global community spanning many borders.
In the decades since 1960, millions went abroad seeking new opportunities. They left behind a deteriorating economy under successive military regimes, to build a new life.
Thousands of skilled Ghanaians moved to places as diverse as the UK, Germany, the United States and elsewhere in Africa.
They set up new businesses, pursued higher education, started families and built communities. The diversity of their locations reflect Ghanaian openness to the world and its peoples, as well as the aspiration to seek a better life.
By the mid-1990s, it was estimated between two and four million Ghanaians (between 10-20% of Ghana’s population) were living outside of the country.
The diaspora kept close ties with their homeland. Through community groups, events and celebrations, they brought the spirit of Ghana into cities across Europe and the United States.
Fast forward 20 years and it’s an entirely different story.
It’s a story of young Ghanaians who see their future not in Europe or North America, but in Ghana. For this generation of young people it’s not only a place of historical ancestry but a destination to do business.
The WorldRemit team met some of these diaspora returnees on a trip to Ghana, and their stories will feature as part of our 60th anniversary celebrations.
People like Kwami Williams, the MIT graduate behind Moringa Connect. The company works with smallholder farmers to produce moringa nuts, which are then turned into luxury beauty products and food supplements.
Or the brothers behind Bohten, Nana Kwadwo Osei and Nana Boateng Osei – who create designer glasses from reclaimed hardwoods and metals.
But it’s not only in building businesses that the diaspora have been important to Ghana’s growth.
Following a return to a multi-party government in 1992, the economy began a strong recovery boosted by legal reform and a free press. Many sectors across industry, finance and technology opened up to competition and investment.
Today, Ghana is frequently held up as a shining example of peaceful governance and strong technological leadership. And in the last couple of years, Ghana has emerged as one of the leading countries in Africa for digital financial services. In particular, mobile money – a way of transferring money using mobile phones – has emerged as one of the forces driving the country forward to a ‘cash-lite’ economy, and increased financial inclusion.
According to the Bank of Ghana’s latest report on the sector, by July 2016 registered subscribers had risen to 17.2 million, up from 10.4 million just a year earlier.
The total value of all transactions made on mobile money networks in that period exceeded GH¢37.07 billion (USD $9.58 million), representing more than 118% growth in 12 months.
Through innovative collaborations with the banking sector and fintech companies, Ghana’s mobile money providers now offer savings, insurance, remittance and investment products.
Most recently, the Central Bank approved plans for mobile money customers to earn interest on the balance held in their account. This brings Ghana into leadership position with just one other country – Tanzania, where three mobile money providers now offer interest dividends on customer accounts.
The diaspora has a crucial role to play here too.
Remittances were highlighted last year by the government of Ghana as a key contributor to mobile money’s growth, as new partnerships enabled customers to receive international money transfers directly into their accounts
At the end of 2016, more than 60% of Ghanaians owned a mobile phone – well above the regional average of 47% for West Africa.
As this increases, it only becomes easier to stay connected to friends and family at home –not only through calls and texts, but financially.
According to WorldRemit transactional data, Ghanaians abroad are far more likely to use their mobile phone to send money internationally than Nigerians or Kenyans, in numbers higher than the global average.
These are the people driving the increase of mobile money in Ghana – sending from their smartphone to the mobile phones of people back home, instantly, just like a text message.
International remittances to mobile money have increased 60% in the past six months. Remittances from Ghanaians in the USA have grown by 84%, driven by people in places as diverse as Dallas, Texas and Newark, New Jersey.
They’re sending for school fees, groceries and medical support. As well as one of the most common reasons people cite for sending money home – to invest in their own businesses.
Ghana’s cash-lite system is making payments easier – domestically and internationally, making it easier to bring money directly into the economy. This also includes increased digital accessibility when it comes to bank accounts, all leading to greater efficiency in the entire economy.
Ghanaians abroad deserve to be celebrated – for their determination, their passion, their love of their country. But most of all, for what we can learn from them.
Ismail Ahmed, Founder and CEO of digital money transfer service WorldRemit will be talking about the power of the Ghanaian diaspora at the Tech in Ghana London Conference on Monday 27th February. Read more here